ECOtality, the San Francisco-based “leader in clean electric transportation technologies” (they make electric car charging stations), filed for Chapter 11 bankruptcy protection Monday after laying off employees last week and repaying $96 million out of a total $115 million in stimulus money awarded by the U.S. Department of Energy in 2009.
Trading in the company’s stock was halted Tuesday morning; a single share of ECOtality stock can currently be had for 23 cents. The bankruptcy filing is pessimistic, noting the “Company’s common stock will have very little or no value given the amount of the Company’s liabilities compared to its assets.”
Under the filing, ECOtality will receive a $1.25 million loan from Nissan, an unsecured creditor, and will continue to operate until its remaining assets have been sold off.
Critics of the cozy relationship between the Administration of President Barack Obama and the green energy sector told The Washington Times ECOtality’s demise is only the latest example of how government has no business putting its thumb on the competitive scales that weigh a company’s viability in the private marketplace.
“Government is terrible at picking winners and losers for a simple reason: Politics always interferes,” energy policy expert William Yeatman, of the Competitive Enterprise Institute, told The Times. “That news is only the latest costly reminder that Energy Department bureaucrats shouldn’t be running a taxpayer-backed investment bank for green energy.”
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Jonathan Read, the company’s former CEO, styled himself as a “political beast.” Read boasted about his political connections, and received bonus payments contingent on ECOtality winning DOE support.
One ECOtality executive blamed the company’s financial troubles on Read, who, the executive said, “offered no leadership and either directly or indirectly […] squandered or pocketed all the government money.”
News of a possibly bankruptcy filing had been swirling since August, so it was only natural that investors were waiting in the wings Tuesday with a class action lawsuit. According to The Wall Street Journal’s MarketWatch site, the suit alleges that the company knew its finances were dire long before disclosing any negative information to investors
Does that mean the U.S. government, which got had on its $115 million deal, can prosecute?
Despite some Congressional criticism and a Labor Department probe into its payroll practices, that’s a moot question. The Obama Administration, which has vetted speculative green energy ventures in doling out the stimulus money, isn’t likely to take an adversarial position against its own failed policies.